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    7 Replies Latest reply on Dec 23, 2008 1:58 PM by Maddeb

    Growing your business

    jwgeorge01 Newbie
      I have a lawn care service, and I'm interested in growing my business. My son & I currently take care of a growing number of customers, and we are gearing up to take on our first a large project. What are the banks looking for in regards to credit and collateral.

        • Re: Growing your business
          NoBullFunding Scout
          Your Personal Credit - Beyond the actual score, banks do not look kindly on lateness (30, 60, or 90 days), chargeoffs, bankrupty, and maxed out balances. All of these are indicative of financial problems and/or irresponsibility. If you didn't repay someone who you owed money once, chances are much higher that you'll do it again. There is no such thing as "erasing" bad credit. If you were late on a payment, it's there to stay unless you can prove it wasn't late. Lenders cannot change facts, and would be exposed to liability if they mis-represented your repayment history.

          Personal Financial Statement - This is a summary of your personal assets and liabilities. Owning real estate, stocks, bonds and other valuable assets will help you, while large personal debt obligations will hurt you. In almost all cases, you will be asked to personally guaranty the loan. The stronger your PFS (ie having liquid assets or a high net worth), the more comfortable a lender will feel about lending to your business.

          A strong net worth and pristine credit are often the difference between a borderline loan being approved or denied.

          Business financials - with at least a two year track record, banks will want to perform a trend analysis. Is your business headed in the right direction? The single most important item that banks want to identify is cash flow (sometimes known as EBITDA). They want to know that your business generates enough cash to service all of your obligations in addition to their debt. Banks often will look at cash flow coverage,which is simply the ratio of your cash flow to your debt service. Rule of thumb is that you want your cash flow coverage to be 1.25 times.

          Business Plans - While a critical tool for entrprenuers to have, lenders will never lend to you based on projected income. You can have your plan professional written, bound and printed with all sorts of graphics, research and charts - all of which make a case for why your business will succeed. Unless it already has generated income, that plan will carry little weight. A banker who reads a business plan and approves it because they like the idea is a TV invention. I always used to tell my clients that while I love their ideas, only historical success will help me make a case for them

          If your business is not a strong candidate for a business loan, it doesn't mean that you can't get financing anywhere. It does mean that you will on average pay more, and you will stumble onto some unscrupulous people who claim they can help you, but are really looking to take your money and run. If it sounds too good to be true, it likely is. So when some website tells you something like "Bad credit, no collateral? No problem!", chances are that their loans will benefit them more than they'll help you.

          There are banks that are willing to work with you and get creative, but in cases like these you need to have an open mind. If you hope to reach an agreement that works for both parties, you have to be open to finding other guarantors or putting up collateral (like your home).

          If this post looks familiar to any of the regulars on this forum, its because I posted this same info when my screen name was "Milleisen" back in august.
          1 of 1 people found this helpful
            • Re: Growing your business
              The best investment you can make is develop a business credit report. A strong business credit profile is more important right now than a personal credit report.

              Begin your search online, try "strong business credit" (just like that in quotes). Beware, most services cost about $900.



              Ilya Bodner
              Small Business Owner
              Initial Underwriting Group
              • Re: Growing your business
                Maddeb Adventurer
                NoBull, will you please tell me what are the alternative options for obtaining funds, if you've fallen into hard times, and were able to meet all you're debt obligations on time, or at all.

                I am a new business owner, just under 2 years, and I've leard so much on what to do, and what not to do. It's been a learning curve since I started the business, and a learning experience. I've made some bad choices, like not to make 'cut-backs' in a time fashion. That really hurt me financially, and my payroll debt, and supplier debt were not met on time. I was afraid to lay-off people that were not able to contribute when the season slowed.

                Going forward, if I succeed to stay in business through this troubled economy, I've learned a lot just by being a business owner. I know to do things differently and always be flexible in this everchanging economy. Nothing remains the same, so as things change, so should your business plan.

                Lastly, DO NOT PUT ALL YOU EGGS IN ONE BASKET!!! Diversify your business. Business development is so important, as well as offering a variety of services in your industry. This was the most valuable lesson that I learned the hard way.
              • Re: Growing your business
                LUCKIEST Guide
                Growing your business, Welcome

                Tell me more. Who are you?? Where are you?? How long have you been in business??

                Do you have a Federal I D Number?? How about an Accountant??

                Banks are looking for history, prior year tax returns and a Business Plan.

                Good luck, LUCKIEST
                • Re: Growing your business
                  jrundell Wayfarer
                  Two years ago, I started on a journey that was frustrating and scary. At the same time I met some wonderful people and have become a National leader in a couple of opportunities.Success is a concerted effort of education , support and sometimes just luck !

                  The most important thing to look for is Support. That is the key to anything about making money anywhere.
                  Who not only will show you the ropes but also, Empower you to become successful with the mentoring and coaching to do the things that are successful and lead you to the sources that work.

                  May I suggest you check out my portfolio page at but more importantly the latest buzz on the net , that is making educational material profits quickly for anyone to succeed.


                  Jim Rundell
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                  • Re: Growing your business
                    WannaDevelop Wayfarer
                    Build a nice website and hunt for more clients, hire additional staff, etc... :)